A. No sustainable investment objective
This financial product promotes environmental or social characteristics, but does not have as its objective a sustainable investment.
B. Environmental or social characteristics of the financial product
The sub-fund promotes environmental and social characteristics by investing in assets which operate across the entire value chain and, among others:
- contribute to reducing Greenhouse Gas intensity, and
- meet high or improving Environmental, Social and Governance score, as per the scoring performed by the Investment manager.
C. Investment strategy
The sub-fund ESG investment management process relies on four main pillars:
Pillar I. Norm based screening: Norm-based screening is the process of excluding companies associated with key social or environmental issues. The Investment manager considers six such exclusions:
- controversial weapons,
- tobacco producers,
- adult entertainment producers,
- thermal coal,
- predatory lending and
- companies that are identified as non-compliant according to UN Global Compact principles
Pillar II. Exclusionary Screening: Negative or exclusionary screening is the process of excluding instruments from an investment universe based on the Investment manager expectations regarding specific ESG-related considerations.
Further to norm-based screening, Unigestion considers four such exclusions:
- non-covered companies,
- worst-in-class companies and
- high Greenhouse Gas emitters.
- Companies with severe controversy level
Pillar III. ESG Guidelines: The investment manager requires the sub-funds’ portfolios to maintain an ESG score that is higher than a pre-defined reference on an ongoing basis.
This is achieved through a continuous positive tilt to investments with better ESG scores and a negative tilt to the ones with the worst ESG scores. In the majority of the investments, when applicable, the Investment manager also maintains a control on Greenhouse Gas intensity reduction versus a pre-defined reference on an ongoing basis.
The Investment manager does the deep dive based on various information, validates it via independent stress tests (climate risk), and performs standard checks based on investment guidelines.
Pillar IV. Active Ownership / parallel efforts: The investment manager aims to be an active owner of companies on ESG issues where there is a reasonable chance of influencing their behaviour and positioning positively.
When the process does not involve companies and/or equities, the Investment manager has other parallel considerations such as investing in green bonds in the case of sovereign investments which are considered relevant to the asset class.
The investment manager’s proxy voting is carried out by the Investment manager’s proxy voting adviser called Institutional Shareholder Services (ISS) using an enhanced version of its International Sustainable Proxy Voting policy. The investment manager monitors the voting guidelines to ensure they are aligned with its approach to stewardship.
More information the investment strategy and notably on the scoring methodology is to be found at [URL]
D. Monitoring of environmental or social characteristics
The main sustainability indicator used to measure the Greenhouse Gas intensity of the portfolio companies is the GHG intensity (tons of CO2e per million USD in revenues), combined with the ESG score of portfolio companies as further described above.
The monitoring of these indicators is done on an ongoing basis throughout the lifecycle of the sub-fund. In addition, the investment manager has a dedicated Responsible Investment Committee which is sponsored by investment manager’s CEO that leads the development and integration of SRI principles into all the investment processes.
The methodology used to measure the attainment of the ESG characteristics promoted by the sub-fund is part of the third pillar of the investment strategy and supported through the continuous positive tilt toward investments with better ESG score.
F. Data sources and processing
As data sources, the investment manager employs a combination of research, news, information gathered through dialogue with companies and data from external research providers including but not limited to Sustainalytics, S&P Trucost and Transition Pathway Initiative
G. Engagement policies
Engagement is part of the investment strategy of the sub-fund used to attain the environmental and social characteristics promoted by the sub-fund and is therefore further described in section D of this document.